Azerbaijan - a nation with a Turkic and majority-Muslim population - was briefly independent from 1918 to 1920; it regained its independence after the collapse of the Soviet Union in 1991. Despite a 1994 cease-fire, Azerbaijan has yet to resolve its conflict with Armenia over the Azerbaijani Nagorno-Karabakh enclave (largely Armenian populated). Azerbaijan has lost 16% of its territory and must support some 528,000 internally displaced persons as a result of the conflict. Corruption is ubiquitous, and the promise of widespread wealth from Azerbaijan's undeveloped petroleum resources remains largely unfulfilled.

Geography

Azerbaijan

Location:

Southwestern Asia, bordering the Caspian Sea, between Iran and Russia, with a small European portion north of the Caucasus range

local scientists consider the Abseron Yasaqligi (Apsheron Peninsula) (including Baku and Sumqayit) and the Caspian Sea to be the ecologically most devastated area in the world because of severe air, soil, and water pollution; soil pollution results from oil spills, from the use of DDT as a pesticide, and from toxic defoliants used in the production of cotton

chief of state: President Ilham ALIYEV (since 31 October 2003)
head of government: Prime Minister Artur RASIZADE (since 4 November 2003); First Deputy Prime Minister Abbas ABBASOV (since 10 November 2003)
cabinet: Council of Ministers appointed by the president and confirmed by the National Assembly
elections: president elected by popular vote to a five-year term (eligible for a second term); election last held 15 October 2003 (next to be held October 2008); prime minister and first deputy prime ministers appointed by the president and confirmed by the National Assembly
election results: Ilham ALIYEV elected president; percent of vote - Ilham ALIYEV 76.8%, Isa GAMBAR 14%

Legislative branch:

unicameral National Assembly or Milli Mejlis (125 seats; members elected by popular vote to serve five-year terms)
elections: last held 6 November 2005 (next to be held in November 2010)
election results: percent of vote by party - NA%; seats by party - Yeni 58, Azadliq coalition 8, CSP 2, YES 2, Motherland 2, other parties with single seats 7, independents 42, undetermined 4

three equal horizontal bands of blue (top), red, and green; a crescent and eight-pointed star in white are centered in red band

Economy

Azerbaijan

Economy - overview:

Azerbaijan's number one export is oil. Azerbaijan's oil production declined through 1997, but has registered an increase every year since. Negotiation of production-sharing arrangements (PSAs) with foreign firms, which have thus far committed $60 billion to long-term oilfield development, should generate the funds needed to spur future industrial development. Oil production under the first of these PSAs, with the Azerbaijan International Operating Company, began in November 1997. A consortium of Western oil companies is scheduled to begin pumping 1 million barrels a day from a large offshore field in early 2006, through a $4 billion pipeline it built from Baku to Turkey's Mediterranean port of Ceyhan. Economists estimate that by 2010 revenues from this project will double the country's current GDP. Azerbaijan shares all the formidable problems of the former Soviet republics in making the transition from a command to a market economy, but its considerable energy resources brighten its long-term prospects. Baku has only recently begun making progress on economic reform, and old economic ties and structures are slowly being replaced. Several other obstacles impede Azerbaijan's economic progress: the need for stepped up foreign investment in the non-energy sector, the continuing conflict with Armenia over the Nagorno-Karabakh region, and the pervasive corruption. Trade with Russia and the other former Soviet republics is declining in importance while trade is building with Turkey and the nations of Europe. Long-term prospects will depend on world oil prices, the location of new pipelines in the region, and Azerbaijan's ability to manage its oil wealth.

general assessment: inadequate; requires considerable expansion and modernization; teledensity of 10 main lines per 100 persons is low (2002)
domestic: the majority of telephones are in Baku and other industrial centers - about 700 villages still without public telephone service; satellite service connects Baku to a modern switch in its exclave of Naxcivan
international: country code - 994; the old Soviet system of cable and microwave is still serviceable; satellite earth stations - 2 (2005)

men between 18 and 35 are liable for military service; 18 years of age for voluntary military service; length of military service is 18 months and 12 months for university graduates (2006)

Manpower available for military service:

males age 18-49: 1,961,973
females age 18-49: 2,033,186 (2005 est.)

Manpower fit for military service:

males age 18-49: 1,314,955
females age 18-49: 1,676,408 (2005 est.)

Manpower reaching military service age annually:

males age 18-49: 82,358
females age 18-49: 78,067 (2005 est.)

Military expenditures - dollar figure:

$121 million (FY99)

Military expenditures - percent of GDP:

2.6% (FY99)

Transnational Issues

Azerbaijan

Disputes - international:

Armenia supports ethnic Armenian secessionists in Nagorno-Karabakh and since the early 1990s has militarily occupied 16% of Azerbaijan; over 800,000 mostly ethnic Azerbaijanis were driven from the occupied lands and Armenia; about 230,000 ethnic Armenians were driven from their homes in Azerbaijan into Armenia; Azerbaijan seeks transit route through Armenia to connect to Naxcivan exclave; Organization for Security and Cooperation in Europe (OSCE) continues to mediate dispute; Azerbaijan, Kazakhstan, and Russia ratify Caspian seabed delimitation treaties based on equidistance, while Iran continues to insist on an even one-fifth allocation and challenges Azerbaijan's hydrocarbon exploration in disputed waters; bilateral talks continue with Turkmenistan on dividing the seabed and contested oilfields in the middle of the Caspian; Azerbaijan and Georgia continue to discuss the alignment of their boundary at certain crossing areas

limited illicit cultivation of cannabis and opium poppy, mostly for CIS consumption; small government eradication program; transit point for Southwest Asian opiates bound for Russia and to a lesser extent the rest of Europe